Digital transformation and income disparities: A threshold analysis in developing countries
Xuan He & Wenjia Liu
What the paper says
Abstract This study investigates the non-linear impact of digitalization on income inequality within developing economies. Utilising a balanced panel dataset of 45 countries from 2000 to 2023, we employ a dynamic panel threshold model to empirically identify structural breakpoints in this relationship. The findings reveal an inverted U-shaped pattern: at low-to-moderate levels of digitalization (index ≤ 0.48), technological advancement exacerbates income disparity, consistent with the ‘digital divide’ hypothesis. Conversely, beyond this critical threshold, further digitalization significantly mitigates inequality, aligning with the ‘digital inclusion’ perspective. These results suggest that the beneficial ‘digital dividend’ is contingent upon achieving a requisite level of digital maturity. Consequently, policy interventions in developing nations must prioritise the expansion of digital infrastructure to surpass this development threshold, thereby leveraging digitalization as a mechanism for equitable distribution.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.